On December 31, 2022, the balance sheet of ABC Ltd. shows the following information:

Assets	Amount	Liabilities	Amount
Cash	$50,000	Accounts Payable	$20,000
Accounts Receivable	$80,000	Bank Loan	$60,000
Inventory	$70,000	Total Liabilities	$80,000
Equipment	$120,000	Share Capital	$100,000
Accumulated Depreciation	($20,000)	Retained Earnings	$100,000
Total Assets	$300,000	Total Liabilities & Equity	$300,000

During 2023, the following transactions occurred:

1. On January 1, 2023, the company issued 1,000 common shares for $12 per share.
2. On January 15, 2023, the company paid $15,000 to reduce the bank loan.
3. On February 1, 2023, the company purchased $20,000 of inventory on credit.
4. On March 1, 2023, the company sold $100,000 of inventory for $120,000 on credit. The cost of goods sold was $60,000.
5. On April 1, 2023, the company paid $5,000 in rent for the next three months.
6. On June 1, 2023, the company paid a dividend of $10,000 to its shareholders.
7. On December 31, 2023, the company recorded $12,000 of accrued salaries expense.

Calculate the following financial ratios for ABC Ltd. as of December 31, 2022, and December 31, 2023:

a) Current ratio b) Debt-to-equity ratio

c) Gross profit margin

d) Net profit margin

Answer rating: 100% (QA)

The detailed answer for the above question is provided below a Current ratio as of December 31 2022 ... View the full answer